The Fed’s announcement of a “term auction facility” (TAF) caught the market by surprise this morning, despite the advance leak of likely moves which we reported yesterday.  Those unwilling or unable to trade in the off-hours market missed the huge initial rally. We think the timing of the Fed action significantly colored market reaction.  Traders were […]

The Fed’s announcement of a “term auction facility” (TAF) caught the market by surprise this morning, despite the advance leak of likely moves which we reported yesterday.  Those unwilling or unable to trade in the off-hours market missed the big initial rally.

We think the timing of the Fed action significantly colored market reaction.  Traders were justifiably unhappy over the Fed’s lack of attention to the market impact.

Why the Sloppy Timing?

Traders, especially those who had stopped out positions or gone short, assigned various reasons to the Fed’s timing.  Some thought they were reacting to Tuesday’s selling with a hastily created plan.  Others emphasized the lack of attention to markets.

We think that this reads too much into the timing of the Fed policy announcements. Government organizations follow set procedures. The FOMC releases a statement that follows a pattern. It is not their normal automobile for other announcements, so they did their standard thing.

Also, as we noted in our comments yesterday, they were probably surprised by the market reaction. They were taking an action that was in line with publicized majority expectations.  James Hamilton has an especially good analysis of these expectations, with a careful look at fed fund futures.  (Hamilton’s work, along with co-writer Menzie Chinn, is a consistent source of thoughtful economic reasoning).
Obviously the announcement timing could have been better coordinated. The fact that it involved several countries was a factor in making a joint announcement.  The proposal was following a separate track from the interest rate cuts.  It required a vote at the meeting and a coordinated press release which had actually was determined a week ago.
Much of what happens in government is the result of organizations following standard procedures, not the result of some unitary planning.  Traders tend to think of government action as following the reasoning and speed they would use in their own decisions.  This isn’t realistic.

The Policy Substance

Traders, fund managers, and pundits are almost universal in their criticism of the Fed action.  They would have preferred a bigger rate cut, a policy with a clear-cut interpretation and market reaction.  Leading critics, including the influential media personalities Jim Cramer and Larry Kudlow, are skeptical of the Fed move.  They believe that the Fed is responding in an academic fashion to real-world issues.

Should we be surprised that many astute economic observers disagree with the traders?  The consensus of their thinking is that the Fed action is more targeted than a general rate cut.  Here are some typical responses:

Mark Thoma writes, “The Fed has now taken another creative, and likely useful step in getting liquidity to the “choke points” outside the traditional banking system…”  This is something that he has highlighted as a problem.

Felix Salmon points out the unique feature of the TAF program, that the Fed is accepting a wide range of collateral.

Steve Waldman thinks the TAF is a “really, really huge deal.”  In widely-cited comments he points out several advantages over other bailout-style plans.

Greg Ip explains the nuts and bolts of the proposal in his typical clear and incisive fashion.

James Hamilton correctly views this as an “improved discount window” and looks at the possible effect on illiquid assets.

The Public Policy Viewpoint

There are few experts in public policy commenting on this.  Since that’s our sweet spot, we shall offer some observations about how government handles complex problems.

What we will see isn’t a coordinated master plan, but  a patchwork of actions where each addresses one aspect of the problem.  Different agencies are responsible for different pieces.  The Paulson plan, for example, goes after one small aspect of the problem, and it does so without requiring legislation.

A few months ago the Fed attempted to encourage use of the discount window and accepted new forms of collateral.  It did not work, so they’re trying something else.  There are some who believe that a massive part of the problem is getting existing liquidity where it is needed.  If the Fed plan works, it will reduce LIBOR and the TED spread. Since LIBOR affects many loans and mortgages, this would be a good result.  It may also help the market for mortgage securities.

We do not know if this plan will work and neither does the Fed. Governments move incrementally, using trial and error.  While we traders think of a day as a long time, government agencies have a absolutely different time frame.  The agreement announced this day probably took months to plan and negotiate.  For government, that is fast work!

What We Like

There are lots of good features of this proposal.

It is targeted.  It helps the TED spread.  It gets CMO’s in the market.  It opens liquidity for many banks that would otherwise be shut off.

It is expandable.  Some have criticized the initial size of the offerings.  These will change rapidly if the facility works.

It is flexible.  It can be modified or abandoned if it does not work.

It shows commitment.  This innovative approach shows that the Fed isn’t “behind the curve.” The proposal is certainly not a complete solution, but it was not intended as such.  If this does not work, the Fed will try something else.

Conclusion

We think that the new policy might show some results in the first auctions, leading to a positive market reaction.  Everyone is so negative, it is a good time to embrace the possible.

For more visit Source:www.straightstocks.com

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On Track Innovations Ltd.  (OTIV ), a global leader in contactless microprocessor-based smart card solutions for homeland security, payments, petroleum payments other applications and machinery, announced disappointing earnings earlier this day. This is not the first bad quarter investors have been subject to. Revenues came in lower than expected and the company suffered a much larger […]

On Track Innovations Ltd.  (OTIV ), a global leader in contactless microprocessor-based smart card solutions for homeland security, payments, petroleum payments other applications and machinery, announced disappointing earnings earlier today. This is not the first bad quarter investors have been subject to. Revenues came in lower than expected and the company suffered a much bigger loss than expected.

Commenting on the results, Oded Bashan, Chairman and CEO said, “Although this isn’t always reflected in our financial results, we are making progress in the overall business. The number of projects in the pipeline have increased, the big projects we’re involved in are progressing, and we are introducing new products and expanding our IP.”

Mr. Bashan, if it’s not reflected in your financial results, how would we know that the business is “making progress?” For investors, the proof is in the pudding. It’s like saying the win-less Miami Dolphins are getting much better, although they still haven’t won  a single football game this season.  Who cares. Sorry Zack, I couldn’t resist. There will be no getting Jiggy with this stock!

Since late April the stock price has been cut in half. With shrinking margins and lower revenues, no matter how good the technology is and how big your pipeline is, this seems like a second half 2008 story at best. I’ll add that the one interesting fact here’s that they have a strong balance sheet and $40 million in cash, with a total market-cap of $80 million.

For more visit Source:www.straightstocks.com

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Filed under: Google (GOOG), Microsoft (MSFT), Starbucks (SBUX), Small business

Started in 2001, Wikipedia has grown into a massive knowledge base, with more than 75,000 contributors and nine million articles.

No doubt Wikipedia is a great resource to learn about the more massive companies - such as Starbucks Corporation (Nasdaq: SBUX), Google Inc. (Nasdaq: GOOG), and Microsoft Corporation (Nasdaq: MSFT). But there are also many smaller businesses on the site.

So, should you jump in too?

“Wikipedia is one of the most frequented databases on the Web,” said Dan Nichols, director of marketing communications at RightNow Technologies (Nasdaq: RNOW). “We posted an entry on RightNow to make sure we were accurately represented on the site and to increase awareness.”

Keep in mind that a Wikipedia page can help improve your website’s search engine rank - and perhaps drive some traffic. What’s more, a Wikipedia page can lend some credibility to your business.

However, you need to consider some things:

Don’t Get Sales-y: When you put together a page, you need to provide useful factual information about your company (it’s an encyclopedia, right?). Actually, if it gets promotional, a roving Wikipedia editor may change things.

So, a first step is to check out other company sites. How do they present the information?

Street Cred: If there are articles about your company, make sure you link them on your Wikipedia page.

Risks: Keep in mind that Wikipedia can be a free-for-all. For example, a competitor can come to your page and change it. Or, what if a disgruntled customer makes an edit?

In other words, you need to monitor things.

Edit Other Pages: What are other topics that relate to your company? No doubt, these can be good areas to add and edit content.

Example: If your company operates a social network, there’s a page on Wikipedia for “List of social networking websites” that has many companies listed. Why not edit your website into the category?

Tom Taulli operates SmallBizMix.com.

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Filed under: Google (GOOG), Yahoo! (YHOO), salesforce.com inc (CRM), Small business

Each month or so, it seems that I get a new phone book. But I throw them away. When I need to get information on a local business, I go to Google (NASDAQ: GOOG) Local.

According to a research report from the Kelsey Group, about 54% of consumers have substituted world wide web search in place of phone books. “Users are searching local information from the desktop as well as mobile devices,” said Kirk Crenshaw, who is the CEO of RevCatalyst. “Apple (NASDAQ: AAPL)’s iPhone should also accelerate these trends.”

So how can your business capitalize on local online advertising?

Get listed: Make sure you enter your business profile on Google’s Local Business Center and Yahoo’s Local Listing. “When the information is processed, your business will appear on maps and searches,” said Crenshaw. “You should also list with smaller sites, such as Citysearch, Ask.com’s AskCity, and Local.com.”

Paid Search: This means you purchase search phrases on Google and Yahoo (NASDAQ: YHOO). For example, if you operate a mobile phone outlet, you could bid on the phrase “Mobile phone store Fresno California.”

Keep in mind that you can geo-target your ads, which means that they’ll pop-up only for local searches.

However, it can get tricky to manage your campaigns in terms of measuring effectiveness and budgeting. To help things out, Salesforce.com (NYSE: CRM) has developed an on the internet advertising system that’s part of its Salesforce Group Edition.

“I talk to a lot of small businesses who are new to internet marketing and on the web advertising,” stated Kraig Swensrud, a vice president at Salesforce.com. “Companies tend to use on the web advertising as a mechanism to generate new leads, so they need a way to present a marketing message to interested buyers and then capture the name and contact information of that interested buyer.”

To this end, he suggests spending a few hours to answer the following questions:

• What goals are we trying to reach by marketing on the internet?
• Who is the target audience for our message?
• Where physically is our audience located?
• How do we intend to get this audience to react? What is our offer? Where will we bring them after people click on an ad?

Search-Friendly Website: It’s often the case that websites are not optimized for search engines. No doubt, this can result in missing out on possible leads.

Well, there’s a website development platform - which is geared for small businesses - that can help out (although, it will mean recreating your presence.) It’s called Doodlekit.

“With our service, each page has a descriptive URL and are W3C complaint,” stated Heath Huffman, who is the co-founder of Doodlekit. “Or, if you want to insert an image, we require that your write up a description. Such things are often overlooked - but can make a large difference in your Google ranking.”

Tom Taulli operates SmallBizMix.com.

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Filed under: Small business

A friend of mine, who started a new business, wanted to find online resources to help him out. He said the most helpful website was AllBusiness.com.

Well, The Dun & Bradstreet Corporation (NYSE: DNB) would agree. The company concurred to pay $55 million for the web property.

AllBusiness.com has thousands of articles and videos focused on the needs of small businesses - and also attracts about 2 million very special monthly visitors. And, yes, the business is primarily based on advertising. In fact, AllBusiness.com is expected to contribute $10 million in revenues for D&B for 2008.

What’s more, D&B had some other good news. There will be a 20% increase in the quarterly dividend to 30 cents and free cash flows are expected to range from $337 million to $352 million in 2008.

All in all, it’s a good day for D&B, with the stock price up 4% to $93.70.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

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Filed under: Interviews, Small business, Technology

Christopher Johns is certainly well-traveled. For more than a decade, he has started ventures in places like Thailand, Malaysia and the Philippines.

His latest company is SupportSave, an outsourcing services provider for small and mid-sized customers.

I recently had a chance to interview him:

Some background on your company?

The company got its begin in November 2004. Our founders strongly believed that the trend of outsourcing should not only benefit Fortune 1000 companies. So they set out to create a business model that makes outsourcing affordable to businesses of any size.

We thought the Philippines as the most suitable destination for our services because of the strong language skills, minimal accent and affinity towards American culture.

Your general take on your space?

We anticipate a few more years of hyper growth and continued shifting of voice-based services from India to the Philippines. As the market matures, there will be a greater push toward developing a service model to target small and mid-sized businesses to continue the growth. However, this might be difficult as the cost structure of the established providers will not grant them to price their services attractively.

Rival PeopleSupport recently got a takeover offer. Your take?

$15 a share is certainly a very low offer, and for PeopleSupport to be considering it makes me question the deal all that much more. If we’d access to funding we would happily offer $16-17 a share and it would still be a steal.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

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Filed under: Deals, Walt Disney (DIS), Small business

Being a parent can certainly bring lots of joy. At the same time, it can be terrifying. But there’s help: iParenting Media. The company operates websites like www.PregancyToday.com and yes, www.iParenting.com.

Now, the company has sold out to The Walt Disney Company (NYSE: DIS). No doubt, this looks like a great fit and should provide iParenting with much more distribution and content resources.

iParenting got its start in 1996, when the cofounders — Alvin All and Elisa Ast All — looked for a site to help with Elisa’s pregnancy. Well, there weren’t many good sites. So why not begin one? Over time, they built a thriving community of more than 40 different sites, covering areas like teens.

iParenting will be a part of the The Walt Disney Internet Group, which already has a set of popular family websites like Family.com, FamilyFun.com and Wondertime.com.

Disney didn’t disclose the terms of the deal and in today’s trading, the stock price is down 49 cents to $32.55.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar On the web Guide to Decoding Financial Statements. He also operates DealProfiles.com.

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Filed under: Dell (DELL), Wal-Mart (WMT), Amazon.com (AMZN), Target Corp. (TGT), Small business

On so-called “Cyber Monday,” another record was broached, as U.S. on the internet shoppers clicked-up $733 million in sales. Some of the top performers included Wal-Mart (NASDAQ: WMT), Dell (NASDAQ: DELL), Target (NYSE: TGT), and Amazon.com (NASDAQ: AMZN).

These are the huge players. But I’m sure there could have been even more sales, had smaller on the web venues been able to keep up in terms of technology and customer service. In other words, e-commerce sites can still be complex — enough to foil would-be buyers, and resulting in abandoned virtual shopping carts.

How can you improve your on the web store?

“A key is anticipating customer questions,” said Suzy Meriwether, who is the Industry Solutions Manager at RightNow Technologies (NASDAQ: RNOW), which develops customer relationship management applications. “This is becoming more important as products get more complex.”

One suggestions is to put together a FAQ (Frequently Asked Questions), and make sure you periodically update the questions (and think about highlighting the most common). To this end, RightNow recently launched a new web service, called a knowledge syndication widget, that automates this process. Such technologies not only improve customer conversions but also lower costs for call centers and customer support.

But, when putting together the content, it’s critical that you establish realistic expectations. “A key area is about when a customer will receive the product,” said Meriwether. “Also, customers want to know — up front — what the shipping costs will be.”

Another strategy is to provide multiple ways for customers to communicate with your website. “Keep in mind that young consumers may prefer text messaging or IM,” stated Meriwether.

In fact, Meriwether is a massive fan of live chat. “We’ve found that chat can be a great way to shut a deal when a user is at the deciding phase,” she said.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar On the web Guide to Decoding Financial Statements. He also operates DealProfiles.com.

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Filed under: Pfizer (PFE), Johnson and Johnson (JNJ), salesforce.com inc (CRM), Small business, Technology

The “in” thing in software is on-demand, which uses the web to deliver business applications. After all, companies like Taleo (NASDAQ: TLEO), Salesforce.com (NYSE: CRM) and NetSuite have done quite well with this model.

But, it’s not a cure-all. Just take a look at Model N, which has about $44 million in revenues and is growing 60% per year. Some of the customers include biggies like Johnson & Johnson (NYSE: JNJ) and Pfizer (NYSE: PFE).

Something else: Model N doesn’t use on-demand. Basically, it installs software on client sites.

OK, so what’s the catch here? Keep in mind that Model N is addressing a new category in software: “revenue management.” Or, to put things in English, the software helps companies boost revenues. And what company can say “no” to that?

Using some advanced algorithms, Model N helps with complex things like pricing, contract development, trade settlements and channel incentives. As a result, companies can help avoid things like revenue leakage.

“We not only help to boost the top-line,” stated Kamal Ahluwalia, who is the VP of Corporate Marketing at Model N, “but we have the ability to improve regulatory compliance. So, a company can avoid fines or other penalties.”

Interestingly enough, this means that Model N must go beyond creating great technology. “We deal with complicated industries,” said Ahluwalia. “So we hire domain experts, which makes us stand apart from the typical software company.”

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

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Filed under: Products and services, Launches, Google (GOOG), Coca-Cola (KO), Small business

Ah, business, you field of immeasurable opportunity! This day we bring you another opportunity to make your fortune — by leasing your body for advertising! The company Leaseyourbody.com will pimp market your bod to advertisers willing to pay you to wear temporary tattoos with their message.

A forehead placement is shown on its web page, but I’m guessing that other body parts would bring even more $$. Are you catching my drift, Brittany Spears? Don’t be surprised if Google (NASDAQ: GOOG) jumps into the market with a new product, GoogleCheeks, before the end of the year.

Ever wonder who was behind those soothing voices on the PA systems of airports and other public places? Apparently, until recently the voice of the London Underground was Emma Clarke. Emma was made redundant after officials found on her web site spoof messages she’d recorded, including

• “Do not drop litter on the train. Please use the tramps provided.”
• “Would the passenger in the pinstripe suit and

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